Austria is a popular destination for start-up companies. It serves as a gateway for young entrepreneurs to the more than 100 million-strong German-speaking market (DACH) and attracts them with its many financial incentives and flexible legal solutions.
Among these flexible legal solutions is a special form of business entity (FlexCo), which offers greater flexibility in managing capital and employee participation in the company’s success. This makes FlexCo ideal for fast-growing companies seeking more straightforward access to capital and expansion into international markets.
Below, we present incentives for start-up companies and the FlexCo business entity.
1) Incentives
The range of subsidies or incentives for start-up companies in Austria is broad and depends on numerous factors, including the industry, the subsidy required, the innovativeness of the business idea, and whether the incentive is needed to establish or acquire the target company. Let’s take a look at some of the most common incentives in practice:
a) Grants
AWS (Austrian Wirtschaftsservice) provides support to companies in financing projects for establishment, growth, and innovation (excluding the tourism industry). Incentives are available in various forms. In the early stages of development, key programs such as Preseed and Seedfinancing provide crucial support when entrepreneurs must make significant financial investments without immediate returns. These programs fund highly innovative companies or companies with high-tech products, helping them progress from concept to market entry. The Preseed program offers grants of up to EUR 300,000, while the Seedfinancing program provides funding of up to EUR 1,000,000.
Young companies, including those in the tourism sector (ÖHT subsidy), can access special grants during the establishment process or within the first three years of operation. Non-repayable incentives are available for investments in fixed assets ranging from EUR 50,000 to EUR 500,000, covering expenses such as business premises renovation, equipment, furniture, and license acquisitions. Under certain conditions, small companies can receive support at 7.5% of the investment value, while medium-sized companies qualify for 5%.
b) Loans and guarantees or equity financing
Besides grants, incentives are also available in the form of loans and various guarantees or other types of security. Entrepreneurs will find AWS and ÖHT particularly valuable, as they offer favourable loans with special conditions for young companies, providing financing of up to EUR 30 million. At the same time, they also provide guarantees or other forms of collateral that allow young entrepreneurs to obtain bank loans. AWS also provides equity financing (up to EUR 3.5 million) for high-growth potential companies, particularly in the early, high-risk stages when securing traditional loans is challenging. The federal ministry also provides smaller loans (up to EUR 15,000) for early-stage business investments (so-called microloans), primarily designed for vulnerable groups or individuals facing significant financial barriers, offering a simpler and lower capital leverage to help bring their business idea to life.
c) Exemption from fees and taxes under NeuFöG
In practice, it is common to apply exemptions from certain fees, which can be availed of under a special law (NeuFöG) by entrepreneurs who have not engaged in the same or similar activity in the past five years. Eligible parties are, under certain conditions, exempt from fees such as those for registering the company in the business register, transferring property ownership in the land register, and property transaction tax if the property is contributed as a tangible asset to the company, as well as certain payroll taxes for employees during the initial period of business operations. This law allows entrepreneurs to make significant savings on the costs of establishing and transferring a company, which helps to cushion the challenges of the initial period of doing business.
2) FlexCo
The flexible capital company (so-called FlexCo) was introduced in Austria in 2024 and, in terms of its structure, is similar to a classic limited liability company, with some characteristics of a joint-stock company. It is especially popular among start-up entrepreneurs, mainly due to reduced red tape and certain tax advantages for employee participation, while also appealing to international investors.
FlexCo stands out from a classic limited liability company mainly due to:
– the possibility of easier transfer of business shares without strict formal requirements;
– more flexible adoption of general meeting resolutions;
– more tax-friendly employee compensation through the issuance of new business shares;
– after successful company growth, it is also possible to simplify the conversion into a limited liability company or a joint-stock company.
Austria has taken an important step in developing the start-up ecosystem through various public incentives and flexible legal solutions, making it attractive to international investors as well. If you are considering establishing or acquiring a company in Austria, be sure to thoroughly review the available incentives or exemptions and determine which legal structure will be most advantageous for you.
